NDIC Expresses Confidence in Nigerian Banks to withstand Economic Shock

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CEM REPORT | Nigeria Deposit Insurance Corporation (NDIC) has revealed that its robust supervisory framework with the Central Bank of Nigeria (CBN) has enabled it mitigate some of the challenges banks may be facing.

The body stated that, this has made Nigeria’s banking sector immune to shocks that may impact the economy and the financial system.

This is according to NDIC Managing Director (MD), Bello Hassan, at a retreat for members of the Senate Committee on Banking, Insurance and other Financial Institutions with the NDIC, at Eko Hotels in Lagos.

He stated that effective risk-based management remained critical to a safe and sound financial system.

“The NDIC and the Central Bank of Nigeria have a very robust supervisory framework under the risk-based supervisory format the risk-based approach is actually proactive. For the most part, we try to anticipate all these risks – Macro, micro, domestically and globally – to address them continuously.

“So, it is so dynamic that we also are constantly on a real-time basis, monitoring the industry continuously and fine-tuning our supervisory tools, both onsite and offsite, to mitigate some of the challenges the banks may be facing,”

The MD, who was represented by Mustapha Ibrahim, NDIC’s Executive Director (Operations), further expressed relieve over the resilience of the Nigerian banking industry, particularly to external shocks over which the Corporation had no control.

“We have tried to immunise the system to withstand shocks that may be impacting on the economy and the financial system.”

Any change in fundamental macroeconomic variables or relationships that has a significant impact on macroeconomic outcomes and measures of economic performance, such as unemployment, consumption, and inflation, is referred to as an economic shock.

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Senator Uba Sani, Chairman of the Senate Committee on Baking, Insurance, and Other Financial Institutions, reiterated the place of the NDIC in the nation’s economic growth.

“The National Assembly and NDIC are key institutions critical to the growth and development of the Nigerian economy. While we provide the legal and institutional frameworks, NDIC carries out its regulatory or supervisory responsibilities in order to safeguard the banking sector.”

He further expressed believe in the NDIC progress adding that the outcome will aid in the strengthening the financial and banking sectors, particularly the corporation’s supervisory and regulatory role.

Sani, who was represented by Senator Olubunmi Adetunbi, also said, the retreat was a good platform to evaluate the activities of both bodies.

“Engagement of this nature gives us the platform to deeply look into our activities and responsibilities and also examine how far we have gone in carrying out our mandate as required.It helps in injecting fresh ideas into our operations which will materialise into an improved, effective and efficient service delivery to Nigerians”.

Recall that the NDIC, said, its Deposit Insurance Scheme (DIS) does not cover insider deposits made by bank directors and employees, adding that over 97% of depositors at deposit money banks (DMBs) in the country would be completely protected by the N500,000 Maximum Insured Limit.

According to Nairametrics, the total number of accounts in deposit money banks in 2016, 2017, 2018, and 2019 was 83.0 million, 99.1 million, 112.0 million, and 128.4 million, respectively, with the NDIC’s N500,000 Maximum Insured Limit (MIL) fully covering 99.4%, 97.6 %, 97.5%, and 97.6% of accounts, respectively.

As of June 30, 2021, the NDIC had paid a total of N101.67 billion in uninsured sums to depositors of failed banks.

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